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Tuesday, 29 November 2016

Pledging PF to buy home may soon become a reality

Labour Secretary said the proposal will be placed before the EPFO's CBT
meeting and once approved, the scheme will be available for the subscribers.

NEW DELHI: Retirement
fund bodyEPFOmay soon introduce a
scheme to allow its over 4 crore subscribers to pledge their provident fund to
buy low-cost houses and use the account to pay equated monthly installments.

"We are working on a housing scheme for
members of the Employees' Provident Fund Organisation (EPFO). Under it, members
will be allowed to pledge their PF accumulations to buy homes," Labour
SecretaryShankar Aggarwaltold PTI.

He added that the proposal will be placed before
the EPFO's Central Board of Trustees meeting expected next month. Once approved
by theCBT, the scheme will be available
for the subscribers.

Finer points of the scheme, as to what extent
subscribers will be eligible to avail loans and what will qualify as a low cost
house, are yet to be worked out.

Aggarwal further said: "We don't want to impose
anything on the subscribers. Therefore, we will not buy land or build houses
for them. They will be free to choose their own homes from the open market."

The panel had suggested this scheme for low income
formal workers who are EPFO subscribers and could not buy a house during their
entire service period.

Under the proposed scheme, there will be a
tripartite agreement between member, bank/housing agency and EPFO for pledging
future PF contributions as EMI payment.

Last year, the proposal for facilitating the EPFO
subscribers to buy low cost homes was listed on the agenda of the CBT meeting
held on September 16.

A report of an expert committee on housing
facility for the subscribers was also presented to the trustees during the
meeting.

The committee has unanimously recommended a scheme
to facilitate subscribers to buy houses where they will get an advance from
their PF accumulation and will be allowed to pledge their future PF
contribution as EMI (Equated Monthly Installment) payment.

The panel had suggested that subscribers will
purchase a dwelling unit with loans from bank orhousing financecompanies
and hypothecation of property in favour of the latter.

It was suggested the benefits under the scheme of
Ministry of Housing and Urban Poverty Alleviation can also be extended to the
beneficiaries of the scheme.

In May, Labour Minister Bandaru Dattatreya had
told Lok Sabha in a written reply: "Government is exploring the
possibility for providing a suitable low-cost housing scheme for subscribers of
Employees' Pension Fund. It is in preliminary discussion stage."